President Joe Biden had laid out plans to replace the US government’s fleet of nearly 650,000 vehicles with electric vehicles. The move could bolt the electric vehicle sector, which has recently been running hot with companies like Tesla reaching record highs.
Global sales of electric cars reached a high of 2.1 million in 2019, according to a report by International Energy Agency (IEA). And despite challenges posed by COVID-19 in 2020, EV manufacturers like Tesla broke records. Tesla’s stock soared by 740% in 2020, and many analysts predict Tesla shares will continue skyrocketing well into 2021. But while the media spotlight is on the California-based EV giant, many other manufacturers can stand to gain especially if Biden’s plan succeeds.
The president announced on January 26 that he plans to replace the US government fleet with “clean electric vehicles made right here in America, by American workers.”
Some of the top US electric vehicles manufacturers include General Motors (GM) and Nissan. An increase in demand for electric vehicles could also boost the stocks of companies associated in the production of EVs.
Notably, companies that make charging stations could see a spark as these would be crucial to supporting more EVs on the road. Plus, lithium stocks may be on your watchlist as the element is used to make electric car batteries.
Key companies in the electric vehicle sector
Here are some stocks you may want to research.
General Motors (GM) and Ford
Ford and GM stocks jumped after Biden announced his EV initiative. Both companies plan to roll out new electric vehicles in 2021. Ford and GM have had long-standing relationships with government fleet networks.
Tesla
Tesla has a valuation of more than $700 billion. It recently crossed into the top five players of the S&P 500. And despite a less-than-stellar Q4 2020 report, analysts believe the EV maker will continue to make strides in 2021.
On Friday, Argus Research’s Bill Selesky cranked his Tesla price target to $1,010 per share or a 30% increase from $777. He added, “We further believe that the incoming Biden administration will offer rebates and new tax incentives to encourage consumers to buy EVs, which we think favors Tesla versus all the rest.”
Fisker
The luxury EV maker is currently valued at about $4.52 billion, and analysts project its stock to double over the next year.
Bollinger Motors
This New York company makes off-road vehicles targeted at consumers seeking ruggedly-built rides powered by clean energy. While the company has yet to roll its first Hummer-like truck off the lot, it’s currently letting people reserve their vehicles. It also got plenty of media hype this past year.
Workhorse Group
Workhorse shares spiked by 30.2% the day after Biden’s announcement. The company makes electric cars and aircraft for the transportation sector, as well as cloud-based telematics technology.
Blink Charging
Blink Charging is a major manufacturer of charging stations for EVs. According to Biden’s climate plan, he intends to work with local government officials to deploy more than 500,000 new public charging outlets by the end of 2030.
NIO
This Chinese EV company also gained steam in 2020 and saw a 113% increase in car deliveries compared to the previous year. It sold more than 1 million vehicles in 2020 and that number can turn into 10 million by 2030, according to research organization BloombergNEF.
Hyundai
The well-known car maker from South Korea has spent the last few years expanding its fleet of EVs. Earlier this month, it announced plans to partner with Apple to start producing autonomous electric cars by 2024.
Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.
Company summary
General Motors Company designs, builds, and sells cars, trucks, crossovers, and automobile parts worldwide. The company operates through GM North America, GM International, Cruise, and GM Financial segments. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Holden, Baojun, and Wuling brand names. The company also sells trucks, crossovers, and cars to dealers for consumer retail sales, as well as to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments. In addition, it offers safety and security services for retail and fleet customers, including automatic crash response, emergency services, roadside assistance, crisis assist, stolen vehicle assistance, and turn-by-turn navigation, as well as connected services comprising mobile applications for owners to remotely control their vehicles and electric vehicle owners to locate charging stations, on-demand vehicle diagnostics, smart driver, marketplace in-vehicle commerce, connected navigation, SiriusXM with 360L, and 4G LTE wireless connectivity. Further, the company provides automotive financing services; and operates an online store. General Motors Company was founded in 1908 and is headquartered in Detroit, Michigan.
Ford Motor Company designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. It operates through three segments: Automotive, Mobility, and Ford Credit. The Automotive segment sells Ford and Lincoln vehicles, service parts, and accessories through distributors and dealers, as well as through dealerships to commercial fleet customers, daily rental car companies, and governments. The Mobility segment designs and builds mobility services; and provides self-driving systems development services. The Ford Credit segment primarily engages in vehicle-related financing and leasing activities to and through automotive dealers. It provides retail installment sale contracts for new and used vehicles; and direct financing leases for new vehicles to retail and commercial customers, such as leasing companies, government entities, daily rental companies, and fleet customers. This segment also offers wholesale loans to dealers to finance the purchase of vehicle inventory; and loans to dealers to finance working capital and enhance dealership facilities, purchase dealership real estate, and other dealer vehicle programs. Ford Motor Company has a strategic collaboration with ARB Corporation Limited to develop a suite of aftermarket products for the new Ford Bronco. The company was founded in 1903 and is based in Dearborn, Michigan.
Tesla, Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits. It provides sedans and sport utility vehicles through direct and used vehicle sales, a network of Tesla Superchargers, and in-app upgrades; and purchase financing and leasing services. This segment is also involved in the provision of non-warranty after-sales vehicle services, sale of used vehicles, retail merchandise, and vehicle insurance, as well as sale of products through its subsidiaries to third party customers; services for electric vehicles through its company-owned service locations, and Tesla mobile service technicians; and vehicle limited warranties and extended service plans. The Energy Generation and Storage segment engages in the design, manufacture, installation, sale, and leasing of solar energy generation and energy storage products, and related services to residential, commercial, and industrial customers and utilities through its website, stores, and galleries, as well as through a network of channel partners. This segment also offers service and repairs to its energy product customers, including under warranty; and various financing options to its solar customers. The company was formerly known as Tesla Motors, Inc. and changed its name to Tesla, Inc. in February 2017. Tesla, Inc. was founded in 2003 and is headquartered in Palo Alto, California.
Fisker, Inc. focuses on design, development, manufacture, and sale of electric vehicles. The company was founded in 2016 and is headquartered in Manhattan Beach, California.
Historical performance
Stock information
Market capitalization: $4042208000
Dividend yield: N/A%
Company summary
Workhorse Group Inc., a technology company, designs, manufactures, builds, and sells battery-electric vehicles and aircraft in the United States. The company also develops cloud-based and real-time telematics performance monitoring systems that enable fleet operators to optimize energy and route efficiency. It offers electric and range-extended medium-duty delivery trucks under the Workhorse brand; and HorseFly Unmanned Aerial System, a custom-designed purpose-built all-electric drone system. The company was formerly known as AMP Holding Inc. and changed its name to Workhorse Group Inc. in April 2015. Workhorse Group Inc. was founded in 2007 and is headquartered in Loveland, Ohio.
Blink Charging Co., through its subsidiaries, owns, operates, and provides electric vehicle (EV) charging equipment and networked EV charging services in the United States. The company offers residential and commercial EV charging equipment that enable EV drivers to recharge at various location types. It also provides Blink Network, a cloud-based system that operates, maintains, and tracks various Blink charging stations and associated charging data, back-end operations, and payment processing, as well as provides property owners, managers, parking companies, and state and municipal entities with cloud-based services that enable the remote monitoring and management of EV charging stations; and provides EV drivers with station information, including station location, availability, and applicable fees. In addition, the company provides EV charging hardware, software services, and service plans. It has strategic partnerships across transit/destination locations, including airports, auto dealers, healthcare/medicals, hotels, mixed-use, municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations. The company offers its services through field sales force and resellers, as well as sells residential Level 2 chargers through various internet channels. As of December 31, 2020, it deployed approximately 16,617 EV charging stations. Blink Charging Co. was founded in 2009 and is headquartered in Miami Beach, Florida.
NIO Inc. designs, develops, manufactures, and sells smart electric vehicles in Mainland China, Hong Kong, the United States, the United Kingdom, and Germany. The company offers five, six, and seven-seater electric SUVs, as well as smart electric sedans. It is also involved in the provision of energy and service packages to its users; marketing, design, and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after sales management activities. In addition, the company offers power solutions, including Power Home, a home charging solution; Power Swap, a battery swapping service; Public Charger, a public fast charging solution; Power Mobile, a mobile charging service through charging vans; Power Map, an application that provides access to a network of public chargers and their real-time information; and One Click for Power valet service, where it offers vehicle pick up, charging, and return services. Further, it provides repair, maintenance, and bodywork services through its NIO service centers and authorized third-party service centers; statutory and third-party liability insurance, and vehicle damage insurance through third-party insurers; courtesy car services; and roadside assistance, as well as data packages; and auto financing services. Additionally, the company offers NIO Certified, an used vehicle inspection, evaluation, acquisition, and sales service. NIO Inc. has a strategic collaboration with Mobileye N.V. for the development of automated and autonomous vehicles for consumer markets. The company was formerly known as NextEV Inc. and changed its name to NIO Inc. in July 2017. NIO Inc. was founded in 2014 and is headquartered in Shanghai, China.
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Why invest in the electric vehicle sector?
The electric vehicle sector has been driving on an upward road in recent years as it hit record sales, and companies like Tesla found themselves among the biggest in the world.
If Biden rolls out his plan to replace the US government fleet with electric vehicles, American manufacturers may see a surge in production and revenue. But foreign companies with proven track records in the EV game can remain competitive.
And while the EV fleet initiative remains uncertain, it’s clear that Biden is determined on pursuing a clean energy agenda. The electric-vehicle sector can benefit from this.
According to the climate plan detailed on his official website, Biden will push for “rigorous new fuel economy standards aimed at ensuring 100% of new sales for light- and medium-duty vehicles will be electrified.” This move could make EV manufacturers huge customers of the US government.
A Democrat-controlled Congress may work in his favor to make this a reality.
What unique risks does the electric vehicle sector face?
Even though the electric vehicle sector is surging right now, it’s no guarantee it will stay hot into the future. Here are some points to keep in mind:
Market share: Despite recent optimism in the EV sector, electric vehicles accounted for 2.6% of global car sales and about 1% of global car stock in 2019. So it’s not clear when or if electric vehicles would dominate the roads.
Building materials: Lithium-ion batteries power today’s electric vehicles. A spark in the EV sector would drive demand for this finite resource, which can be difficult to mine. And its environmental impact could put environmentally conscious customers at odds with manufacturers. Moreover, regulations on lithium emissions may indirectly have a negative impact on the electric vehicle sector.
Government uncertainty: When President Biden announced his plans to replace the government fleet with electric vehicles on January 26, he was unclear about the specifics, including a timeline for the project, the manufacturers who would be part of the plan and the means by which to fund this massive initiative. Moreover, he didn’t leave tax increases off the table.
Company hype: Electric cars can sound like all the rage today, but there are still some EV companies that are nowhere near the finish line when it comes to production and quality. Semi truck manufacturer Nikola was even accused of fraud over its technology claims, and stocks plunged in late 2020 after seeing a steady rise.
Bottom line
Bidens plan to put more EVs on the road could send a shockwave through the electric vehicle sector. Some electric vehicle stocks are already surging. But before you can invest, you’ll need to open a brokerage account. Compare your stock-trading platforms to find one that’s right for you.
Frequently asked questions
According to Policy Advice, there are more than 5.6 million electric vehicles in the world today.
China has the most electric cars in the world, according to research by Groupe Renault.
ETFs such as the Global X Autonomous & Electric Vehicles ETF (DRIV) and the iShares Self-Driving EV and Tech ETF (IDRV) invest in EV stocks.
Javier Simon is a freelance investing writer at Finder. He is a certified educator in personal finance (CEPF) with a bachelor's degree in multimedia journalism from SUNY Plattsburgh. He's been featured on NerdWallet, Bankrate, SmartAsset and other major finance websites. He loves writing content that helps people understand complex financial concepts, so they can make better financial decisions. When he's not writing and researching investing concepts, he likes going to rock concerts and the movies.
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